South Korean Authorities to Initiate Comprehensive Investigations into ‘Inequitable Cryptocurrency Trades’

South Korean financial authorities are set to initiate “comprehensive investigations” into “unjust crypto transactions.”

According to Daehan Kyungjae, the Financial Services Commission (FSC) revealed on July 7 that it will establish an “investigation system” that is scheduled to commence on July 19.

South Korean Regulators: New Investigative System to Launch This Month

This indicates that the new system will be implemented on the same day the Virtual Asset User Protection Act becomes effective.

The FSC will collaborate closely with the country’s other principal financial regulatory agency, the Financial Supervisory Service (FSS).

The agencies state they “have prepared” for the new legislation by jointly creating “a specialized organization” aimed at investigating what they refer to as “unfair virtual asset transactions.”

This refers to crypto transactions conducted “using undisclosed information,” as well as “price manipulation trading.”

The regulators will also focus on companies and individuals suspected of “trading self-issued coins” for their own advantage.

The authorities will analyze data obtained from crypto exchanges and will also depend on reports submitted through the FSS’s new reporting center.

South Korean regulators are intensifying scrutiny on local crypto exchanges to eliminate dubious trading, as part of efforts to enhance investor protection with a new digital-asset law that will take effect later this month. (Bloomberg) https://t.co/cYn8Ju8p05

— Financial Services Commission – FSC Korea (@FSC_Korea) July 4, 2024

Regulator to Work With Overseas Counterparts

The FSC indicated it would also investigate transactions using its own monitoring systems.

The agency added that it will employ data investigation probes, “on-site data seizures,” and IT “forensics” to assist in identifying potential violators.

It noted that it had “established a system of cooperation” with international regulators and foreign crypto exchanges.

The regulator mentioned it would examine suspicious “cross-border” transactions, along with potential instances of “hacking” and “anonymous transactions.”

Additionally, the FSC stated it would investigate crypto operators who assert they have been victims of hacking incidents – to verify the authenticity of their claims.

South Korea’s foreign exchange market will operate until 2 a.m. from Monday, while its crypto market is set to enter a new phase with the implementation of the virtual asset user protection law this month, which will take effect in the latter half of this year. https://t.co/Zuk6c7Ekco

— The Korea Herald 코리아헤럴드 (@TheKoreaHerald) July 1, 2024

Biggest Crypto Offenders Could Face Life in Jail – Regulators

The FSC stated it would penalize convicted offenders with “fines, warnings, and cautions.”

In more severe cases, those found guilty of “unfair crypto trading practices” could face imprisonment for over “one year.”

The regulator will implement a “system of fines,” requiring convicted offenders to pay “three to five times” the amount they gained through “unfair” methods.

More serious offenders could face extended prison sentences of up to five years. In the most egregious cases, “unfair traders” could receive life sentences.

A Financial Services Commission official clarified that the new “investigation system” will commence “immediately” on July 19. The spokesperson concluded:

“The financial regulatory authorities will utilize all investigative means and capabilities at their disposal. We will establish a fair and transparent trading system in the virtual assets market.”

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